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Why the US Fed’s rate cut matters here

David Chance


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A fifth of workers could be absent from work at the peak of the coronavirus in the UK (Victoria Jones/PA)

A fifth of workers could be absent from work at the peak of the coronavirus in the UK (Victoria Jones/PA)

A fifth of workers could be absent from work at the peak of the coronavirus in the UK (Victoria Jones/PA)

The US Federal Reserve stepped in with a large rate cut today, its first outside its normal schedule of meetings since the Lehman crisis erupted in 2008 and plunged the world, Ireland included, into the worst recession since the 1930s.

Since that time, our reliance on the world’s central banks – the Fed, European Central Bank, Bank of Japan and Bank of England – has only increased and they have bought somewhere in the region of €14 trillion of government bonds, so it was more a question of when rather than if they would step in.

Today’s cut saw the Federal Funds rate at the world’s most important central bank reduced by half a percentage point to a range of 1.0-1.25pc as it took measures to deal “evolving risks to economic activity” posed by the spread of coronavirus.


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